BT Financial Monthly Markets Chart: May 2010. An overview of movements in global financial markets. Prepared by BT Wrap for the adviser market. Includes review of global share markets as well as Australian share market, dominant currencies, interest rates and both short and long term asset classes.

1. BT Monthly Markets Chart
Pack – May 2010
An overview of movements in global financial markets

2. European sovereign debt and growth concerns dent
stock markets markets in May.
 Global share markets all declined sharply in May
In Europe all the main indices closed lower between 3% and 8%. In the US, the
benchmark S&P 500 Index closed the month down 8.2%. Japan fell even more
sharply with the Nikkei losing 11.7% as a stronger Yen hurt shares of exporters.
 The Australian share market posted a decline in May with the S&P/ASX 200
Accumulation Index closing the month 7.51% lower. This was the steepest decline
since the equity market rally began in March 2009.
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3. The Australian share market closed 7.51% lower in
May
S&P/ASX 200 Accumulation Index – 1 year to May 2010
36,000
34,500
33,000
31,500
30,000
28,500
27,000
25,500
24,000
30/05/09 30/07/09 30/09/09 30/11/09 30/01/10 30/03/10 30/05/10
Source: BT Financial Group, Bloomberg
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4. Key Australian economic news – May
 The Reserve Bank of Australia raised interest rates by 0.25% following its early May
meeting. The RBA has since then paused its rate hiking cycle by not lifting rates at its
June meeting. The official cash rate is now 4.5%.
 Building approvals showed growth of 23% year on year to May but this was below
expectations of a rate of 33% because approvals fell in May more than expected.
 Business Inventories grew by a seasonally adjusted 0.5% in the March quarter.
 Job advertisements rose 4.3% in May and on a year on year basis job ads have
increased by 21.7%.
 The unemployment rate declined to 5.2% in May from 5.4% in April.
 Retail sales grew by 0.6% in April which was above expectations of growth of 0.3%.
 Consumer confidence continued to decline with the Westpac/Melbourne Institute’s
consumer sentiment survey showing a steep drop of 7.1% from April to May. The
annual increase in confidence fell back to 19%.
Source: BT Financial Group
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5. The Australian dollar fell sharply in May as global
risk appetite evaporated.
 The Australian dollar (A$) fell particularly sharply against the USD and the Japanese
Yen. Many of the gains the A$ has made over the past months were quickly unwound.
 The A$ declined despite the high relative interest rate as global investors sought safety
and consequently shed higher risk assets. The A$ is often seen as a barometer for
global growth given our commodity based economy and strong trade with Asian
countries. The US dollar and the Yen benefited from this flight to quality.
At the end of May:
A$1 bought US$0.8388 -9.89%
€0.6836 -2.36%
¥76.36 -12.75%
Source: BT Financial Group
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6. The impact of global investment uncertainty can be
seen in the sharp decline in the value of the A$
Rebased value of the A$ versus major currencies over the last 12 months
Source: BT Financial Group.
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7. The Australian dollar versus the US dollar…
Currency markets – A$ per US dollar
0.9900
0.9600
0.9300
0.9000
0.8700
0.8400
0.8100
0.7800
0.7500
0.7200
0.6900
0.6600
0.6300
Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Source: BT Financial Group. Figures at 31 March 2010
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8. the Euro…
Currency markets – A$ per Euro
0.7150
0.7000
0.6850
0.6700
0.6550
0.6400
0.6250
0.6100
0.5950
0.5800
0.5650
0.5500
0.5350
0.5200
0.5050
0.4900
Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Source: BT Financial Group. Figures at 31 March 2010
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9. and the Yen
Currency markets – A$ per Yen
110
105
100
95
90
85
80
75
70
65
60
55
Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Source: BT Financial Group. Figures at 30 April 2010
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10. Official world interest rate movements – April
 Interest rates in the major economies remained unchanged in May. The Reserve
Bank of Australia raised the official cash rate by 0.25% to 4.50% in May but in June
they did not raise again.
Direction of
Current rate Last moved last move
Australia 4.50% May 2010
US 0% - 0.25% Dec 2008
Europe (ECB) 1.00% May 2009
Japan 0.14% Dec 2008
United Kingdom 0.50% Mar 2009
Source: BT Financial Group
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11. Global share market returns
As at 28 May 2010
1 year 3 years (pa) 5 years (pa)
Global
S&P 500 Index (US) 18.52% -10.72% -1.78%
Nasdaq (US Tech.) 27.21% -4.66% 1.76%
Nikkei 225 (Japan) 2.59% -18.24% -2.83%
Hang Seng (Hong Kong) 8.77% -1.42% 7.35%
DAX (Germany) 20.72% -8.88% 5.98%
CAC (France) 7.01% -16.86% -3.17%
FTSE 100 (UK) 17.44% -7.81% 0.89%
Australia
S&P/ASX 200 Accum. Ind. 20.80% -7.09% 6.06%
S&P/ASX Small Ordinaries 19.01% -13.08% 4.69%
S&P/ASX 300 Listed Prop. 27.53% -25.28% -7.28%
Source: BT Financial Group
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12. Short-term asset class performance
1-year rolling returns to 28 May 2010 (%) Best performing asset
class for the year
2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995
Australian
3.75 6.69 6.99 6.21 5.80 5.56 5.11 4.91 4.77 6.36 5.24 5.09 5.41 7.14 7.89 6.21
cash
Australian
5.75 12.77 4.29 3.70 6.74 4.80 4.17 10.09 2.35 11.82 1.79 6.65 15.68 12.56 12.80 2.37
bonds
Australian
27.53 -58.05 -24.16 28.62 18.48 19.97 13.94 13.84 17.38 13.03 2.91 4.26 28.76 19.95 4.71 1.82
property
Australian
shares 20.80 -29.52 -7.04 21.78 30.35 25.63 23.41 -11.93 12.15 3.90 13.18 10.71 18.21 13.55 20.92 -1.89
International
11.38 7.02 8.01 6.38 4.85 6.82 7.66 13.38 5.73 10.83 1.66 8.43 12.55 10.01 14.58 5.55
bonds
International
9.10 -24.48 -14.56 1.47 27.96 8.80 13.74 -33.38 -12.67 -7.05 27.06 18.40 56.60 9.13 12.51 4.56
shares
Source: S&P/ASX 200 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property
Index, UBS Composite 0+ years index, Barclays Capital Global Aggregate Bond Index hedged to $A , UBS Bank Bill 0+ years
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13. Short-term asset class performance (cont’d)
1-year return to 28 May 2010 and 1- year return in prior 12 months (%)
28 May 2009
28 May 2010
Australian bonds 11.5
5.8
Listed property -44.8
27.5
Australian shares -23.2
20.8
Global bonds 8.7
11.4
Global shares -14.6
9.1
Source: S&P/ASX 200 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property
Index, UBS Composite 0+ years index, Barclays Capital Global Aggregate Bond Index hedged to $A
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14. Long-term asset class performance
28 May 2010
$24,000
$22,500 Australian shares
$21,000
$19,500
$18,000 Listed property
$16,500
$15,000 Australian bonds
Global shares
$13,500
$12,000
$10,500
$9,000
$7,500 Cash
$6,000
$4,500
$3,000
$1,500
$0
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Note: Accumulated returns based on $1,000 invested in December 1984
Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+
years index, UBS Bank Bill 0+ years
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15. Oil prices fell sharply in May by 14%. This was the
biggest decline seen since December 2008.
Oil prices – US$ per barrel
$150
$135
$120
$105
$90
$75
$60
$45
$30
$15
$0
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: BT Financial Group. West Texas Intermediate oil price at 28 May 2010
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information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete
description of the matters described. The presentation has been prepared without taking into account any personal
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